JUDGMENT H.N. Seth, J.
1. The assessee Bhag Singh Khandsari is a manufacturer and dealer in gur and khand. He claimed that, during the assessment year in question (1957-58), he sold all the gur and khand manufactured by him through Messrs. Atma Ram Om Prakash and declared his turnover as Rs. 64,173-9-6. However, his books were not accepted and the Sales Tax Officer made a best judgment assessment under Rule 41(5) of the Rules framed under the U. P. Sales Tax Act and estimated his turnover as Rs. 70,000. Subsequently, an information was received that, during the year in question, the assessee had sold goods worth Rs. 1,39,607 through Messrs. Atma Ram Om Prakash. Consequently, the proceedings under Section 21 were initiated and the Sales Tax Officer again made a best judgment assessment and estimated the turnover of the assessee that had escaped assessment as Rs. 1,10,000.
2. In appeal, it was contended that the information received by the department in this case was that the assessee's total turnover was Rs. 1,39,607-0-6 from out of which he had already declared the turnover amounting to Rs. 6-4,169-9-9. Consequently, the Sales Tax Officer was not justified in estimating and determining his escaped turnover at Rs. 1,10,000. He could not make an estimate of the turnover and determine the petitioner's escaped turnover in excess of the difference between Rs. 1,39,607-0-6 and Rs. 64,169-9-9, i. e., Rs. 75,437-6-9. The Assistant Commissioner (Jadicial) relying upon a decision of this Court in the case of Pooran Mal Kapoor Chand v. Commissioner of Sales Tax, U. P. S.T.R. No. 147 of 1957 decided on 30th July, 1963, accepted the submission made on behalf of the assessee and held that in the proceedings under Section 21 of the Act the assessee could not be assessed to tax on a turnover in excess of Rs. 75.437-6-9, the amount which, according to the information received by the Sales Tax Officer, had actually escaped assessment at the time when best judgment assessment order under Rule 41(5) was made. The Additional Judge (Revisions), Sales Tax, Meerut, by his order dated 8th October, 1969, dismissed the revision filed by the Commissioner" of Sales Tax and upheld the order passed by the Assistant Commissioner (Judicial), Sales Tax. Subsequently, this Court, at the instance of the Commissioner of Sales Tax, U. P., directed the Judge (Revisions), Sales Tax, to state the case and refer the following question for its opinion:
Whether, on the facts and in the circumstances of the case, the assessing authority could make an assessment to the best of his judgment under Section 21 of the U. P. Sales Tax Act in a case where the original assessment under Section 7(3) of the said Act had also been completed to the best of judgment ?
3. Section 21(1) of the U. P. Sales Tax Act runs thus:
If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, alter issuing notice to the dealer, and making such enquiry as may be necessary, assess or reassess him to tax:
Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment, or full assessment, as the case may be.
Explanation.--Nothing in this sub-section shall be deemed to prevent the assessing authority from making assessment to the best of its judgment.
4. This section contemplates that if the assessing authority has reasons to believe that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for any year, the assessing authority can after issuing notice to him and after making such enquiry, as may be necessary, assess or reassess him to tax. The jurisdiction to initiate proceedings under Section 21 and to assess or reassess the assessee to tax under that section arises when the assessing authority has reasons to believe that whole or any part of the assessee's turnover has escaped assessment to tax. It does not depend upon the circumstances in which the original assessment under Section 7(3) of the Act read with Rule 41(5) of the U. P. Sales Tax Rules was made. For this purpose, it would be wholly immaterial whether the original assessment had been completed on the basis of the returns found to be reliable or was made on the basis of best judgment after rejecting the assessee's books. Section 21(1) does not lay down that once an assessment on the basis of best judgment has been made under Section 7(3), the assessing authority cannot have reasons to believe that whole or part of the dealer's turnover has escaped assessment. Once the jurisdiction to reopen assessment proceedings under Section 21(1) of the U. P. Sales Tax Act accrues, the explanation to that section makes it absolutely clear that the assessing authority can in suitable cases make an assessment to the best of its judgment.
5. In the case of Pooran Mal Kapoor Chand v. Commissioner of Sales Tax, U. P. S.T.R. No. 147 of 1957 decided on 30th July, 1963, one of the questions that had been referred to this Court for opinion was:
Whether the assessment made under Section 21 on the 31st October, 1949, was a valid assessment ?
6. While dealing with this question, the learned Judges pointed out that this question did not arise out of the order of the Judge (Revisions), Sales Tax, and, as such, could not have been referred for the opinion of the court. The Bench, however, noticed the arguments advanced by the learned Counsel for the assessee and made certain observations with regard to them. The observations made by the learned Judge were as follows:
Question No. (2) also was not raised by the assessee before the Judge (Revisions) in the revision proceeding and does not arise out of the order passed by him. He has not said a word about validity of the assessment order passed under Section 21. It was never contended before him that no proceeding under Section 21 could be started by the Sales Tax Officer if he had already estimated the entire turnover according to the best of his judgment. The best judgment assessment was of the entire turnover and unless he had expressly or specifically excluded from the turnover a particular amount on the ground that it was not. a turnover of the assessee or was not liable to be assessed, or unless he had employed a wrong principle in estimating the turnover, it could not be said by him that the estimated turnover did not include the whole of the turnover of the assessee. The original estimate being according to the best of his judgment, there could not be a better estimate than it. The assessment order under Section 21 must be confined to the escaped turnover; it. must not include the turnover on which the original assessment order was passed. The original assessment order was not liable to be reopened at all. What could be done under Section 21 was to determine the amount of the escaped turnover and assess tax on it. No such arguments were raised on the assessee's behalf before the Judge (Revisions) and, consequently, they have not been discussed by him in his order. Therefore, the question of the validity of the assessment order does not arise out of the order passed by the Judge (Revisions) and cannot be referred by him to this Court.
7. As we read the aforesaid portion of the judgment we find that what the learned Judges have done is to state the submissions of the learned Counsel for the assessee for urging that the assessment made under section 21, on 31st October, 1949, was invalid. The learned Judges did not express their own considered opinion on the points raised on behalf of the assessee. They specifically stated that as no such arguments were raised on behalf of the assessee before the Judge (Revisions), accordingly, the question regarding validity of the assessment order did not arise from out of the order passed by the Judge (Revisions) and the same could not be referred to the court for opinion. We will not be justified in reading those submissions as the considered opinion expressed by the court on the points fought to be raised before it. However, proceeding further, the learned Judges observed that the statement of the case clearly showed that the proceedings under Section 21 had been initiated because the sales tax authorities had been informed that they had under-assessed the assessee and not because any part of the assessee's turnover had escaped assessment. They, accordingly, held that the proceedings in that case were more in the nature of revising an assessment rather than bringing to tax any part of the turnover that had escaped assessment. In the circumstances, the very initiation of those proceedings was invalid. They in the passing noticed the explanation to Section 21(1) which provides that nothing in that sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment, and observed that the explanation applies only to a case where the whole turnover of the assessee escapes assessment and not to a case where only a part of the turnover, which, in the circumstances, would require reassessment, escapes assessment. Since after coming to the conclusion that the very initiation of proceedings under Section 21 was invalid, the question whether best judgment assessment can be made even in a case where a part of the turnover of a dealer has escaped assessment did not arise for consideration, we treat the observations made by the Bench regarding the explanation to Section 21(1), as mere obiter dicta.
8. A similar question arose for consideration before another Division Bench of this Court in the case of Bhagat Ram Jai Narain v. Commissioner of Sales Tax, U. P., Lucknow [1969] 24 S.T.C. 287. In that case, after discussing the scope of Section 21(1) of the U. P. Sales Tax Act, this Court concluded that the section contemplated an assessment or reassessment proceeding against a dealer where the whole or part of his turnover had escaped assessment to tax. When the Sales Tax Officer proceeds to reassess the turnover he is entitled to cover the entire range of turnover. In doing so, depending upon the circumstances, he may even make a best judgment assessment. However the Bench, without expressing its final opinion on the point cautioned that if the original assessment was made on the best judgment basis and, in doing so, the Sales Tax Officer had considered all the sources of turnover and had taken into account the turnover from all of them and then made a best judgment assessment, it might be possible to say that the jurisdiction under Section 21(1) could not be invoked for making a further best judgment assessment. It noticed the decision of this Court in Pooran Mal Kapoor Chand's case S. T. R. No. 147 of 1957 decided on 30th July, 1963 and observed as follows:
Our attention has been drawn to the further observation of the learned Chief Justice that the assessment order under Section 21 must be confined to the escaped turnover and must not include the turnover on which the original assessment order was passed. He has also construed the explanation to Section 21(1) to apply only when the whole of the turnover has escaped assessment and not where a part of the turnover has escaped assessment. It seems to us that the learned Chief Justice did not, at the time when he made these observations, have in mind the facts of a case such as the one before us. If the whole basis of the original assessment is unsound, and it is found that the turnover has escaped assessment, we see no reason why the Sales Tax Officer should not be entitled to reopen the original assessment and reassess the turnover. We do not see why the right to make an assessment to the best of his judgment should be denied to him in such a case. Otherwise, we must hold that in proceedings under Section 21 although the basis upon which that dealer supports his return is false and the material adduced by him is unreliable, the Sales Tax Officer is powerless to make an assessment to the best of his judgment. The object of Section 21(1) is to empower the Sales Tax Officer to reassess the turnover of the dealer, and that object would be defeated if we give to the explanation the limited scope as suggested. It is well-settled that the language of the provision should be so construed that, if possible and without straining its language, the object of the statute should be achieved. When the explanation refers to the power of the assessing authority to make an assessment to the best of his judgment, it refers to the power exercised in assessment proceedings, and it cannot be disputed that whether the Sales Tax Officer is assessing or reassessing a dealer the proceeding, in its essential nature, is an assessment. In our view, the explanation to Section 21(1) comes into play both when the turnover of a dealer is assessed, and also when it is reassessed. As the observations in Poor an Mal Kapoor Chand S. T. R. No. 147 of 1957 decided on 30th July, 1963 are upon the facts entirely distinguishable from the one before us, we do not consider it necessary to refer this case to a larger Bench.
9. The aforesaid observations clearly show that the Bench did not consider that the observations made in the case of Pooran Mal Kapoor Chand S. T. R. No. 147 of 1957 decided on 30th July, 1963, regarding non-applicability of the explanation to Section 21(1) to a case where only a part of the turnover of a dealer has escaped assessment to be binding, as, in its opinion, those observations had been made in the context of special facts of that case.
10. Similar view was expressed by another Division Bench of this Court in the case of Kashi Jewellers v. Commissioner of Sales Tax, U.P. [1969] 24 S.T.C. 291, wherein it was observed as follows:
Lastly, it is contended that the view that we are taking is likely to conflict with the Division Bench decision of Desai, C. J., and K.B. Asthana, J., in Pooran Mal Kapoor Chand v. Commissioner of Sales Tax S. T. R. No. 147 of 1957 decided on 30th July, 1963. In that case, the learned Judges did not intend to lay down an absolute rule because they themselves modified their observations by making two exceptions to it. The first exception that they made was that, in a case, where a turnover had either expressly or specifically been excluded, the best judgment assessment was possible even while reassessing under Section 21 of the Act. The second exception that the learned Judges pointed out. was that, in case, 'wrong principle in estimating the turnover' was employed, even then the best judgment assessment would be made while reassessing. 'Best judgment assessment' means an assessment which the assessing authority himself makes on the basis of the facts and circumstances operating in a case. If any additional material comes to the knowledge of the assessing authority while dealing with the proceeding under Section 21 of the Act, there is nothing to prevent him from making a best judgment assessment.
11. The learned Counsel for the assessee then referred us to the following observations made in the case of Bhagat Ram Jai Narain [1969] 24 S.T.C. 287:
'It would be, perhaps, a different story if the Sales Tax Officer had arrived at the original assessment itself to the best of his judgment' indicating a possibility of a construction that in their view once a best judgment has been made it might not be possible to make another best judgment (sic) where required to consider and contended that, in the opinion of the Bench, a best judgment assessment under Section 21 of the Sales Tax Act cannot be made in a case where the original assessment itself was a best judgment assessment.
12. We find that the Bench which decided the case of Bhagat Ram Jai Narain [1969] 24 S.T.C. 287 had an occasion to deal with a similar question in the case of Footer Mal Megh Raj v. Commissioner of Sales Tax [1971] 28 S.T.C. 361, wherein it made the following observations:
If an original assessment is a best judgment in respect of a particular source, no second best judgment assessment is permissible under law under Section 21 of the U. P. Sales Tax Act, 1948, on the ground that the original estimate was low. It is not possible for the department to substitute one best judgment assessment by another merely on a change of opinion and in the absence of any fresh definite material. However, if some definite material comes into the possession of the department, which warrants a higher addition to the disclosed turnover than the one originally made on best judgment basis, it is open for the department to do so. But, in such a case, it is only just and proper that the addition already made in the original assessment must be deducted from the addition which is proposed to be made under Section 21 of the Act. That is not a rule of law but merely a rule of common sense.
13. This case, in our opinion, is a clear authority for the proposition that even in a case where originally a best judgment is made, if some definite material, comes into the possession of the assessing authority that warrants a higher addition to the turnover as originally determined on best judgment basis, it would be open to it to reopen proceedings under Section 21 of the Act. But then a second best judgment assessment cannot be made merely because of a change of opinion by the assessing authority.
14. The scope and ambit of Section 12(8) of the Orissa Sales Tax Act is almost similar to the scope and ambit of the provision relating to assessment of escaped turnover under Section 21 of the U. P. Sales Tax Act. Similarly, the provision of Section 12(5) of the Orissa Act. provides the manner (including that by making an estimate to the best of judgment) for determining the turnover of an assessee. In the case of State of Orissa v. Sri Rama Electrical Stores [1974] 33 S.T.C. 430, the learned Judges of the Orissa High Court after discussing the various authorities on the subject summarised their conclusions thus:
(i) To an assessment made under Section 12(8) of the Act the mode to be adopted is as indicated in Section 12(6) thereof.
(ii) The assessing officer is entitled to assess according to best of his judgment under Section 12(8) of the Act.
(iii) Even if the original assessment is according to the best of judgment, there can be a reassessment under Section 12(8) of the Act according to the best of judgment.
(iv) Depending on the facts of each case it has to be found out whether the original estimate could admit of the suppression now found at the reassessment stage within its fold. As indicated by the Allahabad High Court in Footer Mal Megh Raj, Firozabad v. Commissioner of Sales Tax [1971] 28 S.T.C. 361, it is more a rule of common sense than a rule of law.
15. We fully share the view expressed by this Court in Footer Mal Megh Raj's case [1971] 28 S.T.C. 361, that depending upon the facts and circumstances of a particular case, it would be open to the assessing authority to make a best judgment assessment in proceedings under Section 21 of the Sales Tax Act even in a case where the original assessment was made on best judgment basis.
16. In this case, even though the original assessment was made on best judgment basis, the question that there was no material before the assessing authority on the basis of which it could have reason to believe that a part of the assessee's turnover had escaped assessment has not been agitated. Accordingly, we take it that notwithstanding that the original assessment was made on the basis of best judgment, the Sales Tax Officer had ample jurisdiction to initiate and reopen proceedings under Section 21(1) of the Sales Tax Act. We find that the dealer had declared his total turnover of gur and khand as Rs. 64,169-9-9 and had claimed that the entire sales had been effected through Messrs. Atma Ram Om Prakash of Muzaffarnagar. At the time of original assessment the assessee had failed to produce the accounts of the sales made by it through Messrs. Atma Ram Om Prakash. His books were rejected and his total sales were estimated at Rs. 70,000. However, subsequently, the books of Messrs. Atma Ram Om Prakash were examined and they showed that during the relevant year they had sold goods belonging to the assessee and his partners, amounting to Rs. 1,39,607-0-6. The assessee was confronted with the books of Messrs. Atma Ram Om Prakash, but could not give any proper explanation for the discrepancy and it appears that he accepted the position that, the sales effected by him through Messrs. Atma Ram Om Prakash were to the extent of Rs. 1,39,607-0-6 and prayed that the Sales Tax Officer may deal with him leniently. The Sales Tax Officer took it that, in these circumstances, the assessee's admitted turnover amounting to Rs. 1,39,607-0-6 in various names far exceeded Rs. 64,169-9-9, the turnover that had been voluntarily disclosed by him. Thus, it was clear that a serious attempt to suppress his turnover had been made by the assessee. In these circumstances, he was not satisfied that the turnover of Rs. 1,39,607-0-6, as it appeared from the accounts of Messrs. Atma Ram Om Prakash, was the only turnover of the assessee. In fact, it came to the conclusion that the assessee might have effected sales through persons other than Messrs. Atma Ram Om Prakash as well and estimated his escaped turnover at Rs. 1,10,000. We are satisfied that, in these circumstances, the assessee's books were not reliable and there was reason to think that the assessee might have effected sales through persons other than Messrs. Atma Ram Om Prakash as well. It was, therefore, open to the Sales Tax Officer to estimate the assessee's turnover at an amount higher than Rs. 1,39,607-0-6 as shown in the books of Messrs. Atma Ram Om Prakash.
17. In the result, the question referred to us is answered in the affirmative and in favour of the Commissioner of Sales Tax, U.P. As no one has appeared on behalf of the assessee, we make no order as to costs of this reference.